Environmental Economics Final Report of the Environmental Economics Activity Priority Actions Programme Regional Activity Centre Split, December 2007 Prepared by: Glafkos Constantinides, PAP RAC Consultant Savvas Maliotis, National Consultant Final Report of the Environmental Economics Activity Priority Actions Programme Regional Activity Centre Split, December 2007 Table of Contents List of Figures..................................................................................................................................................iii List of Tables ...................................................................................................................................................iii Acknowledgements...............................................................................................................................iv Part I: General Environmental Economics Guidelines....................................................... 1 1. Environmental Economics – An Overview .................................................................................. 3 1.1 Integration of Environment and Development – The Key Issue................................................................. 3 1.2 Integrated Coastal Zone Management (ICAM) ......................................................................................... 3 1.3 The Essence of Environmental Economics – Some Basic Principles........................................................ 3 1.4 The First Steps .......................................................................................................................................... 4 2. The Main Challenges and Rationale For “Valuing Environmental Resource” ....................... 5 3. Methodology of Resource Valuation............................................................................................ 6 3.1 The Starting Point in Resource Valuation.................................................................................................. 6 3.2 “Categories of Value” in Environmental Economics .................................................................................. 6 3.3 Valuation Techniques Approaches ............................................................................................................ 7 3.4 Main Outputs and Benefits of Resource Valuation .................................................................................... 9 4. Guidelines for Data Requirements and Analysis for Resource Valuation ............................ 10 4.1 Data and Analysis.................................................................................................................................... 10 5. Shaping Up Environmental Economics for Working Purposes.............................................. 13 5.1 Annotated Work Tasks and Outputs........................................................................................................ 13 5.2 Suggested Contents of the Study Report ................................................................................................ 13 6. Economic Instruments – The Issue of Sustainable Finance ................................................... 14 6.1 Financial Strategy.................................................................................................................................... 14 6.2 Mobilization of Financial Resources Through the Application of Market-Based Instruments................... 16 6.3 Environmental Economics: An Outline of Rapid Training Workshop ....................................................... 18 Part II: Guidelines For The Pilot Application Case Study In The Southern Larnaca Coastal Area ................................................................................................................. 19 7. Guidelines for Data Requirements for Resource Valuation Analysis..................................... 21 7.1 Constructing an Economic Profile of the Coastal Area ............................................................................ 21 7.2 Getting Into Economic Analysis............................................................................................................... 22 7.3 Codifying Preliminary Results.................................................................................................................. 23 7.4 A Framework of Where the Analysis is Heading...................................................................................... 24 7.5 Shaping up the Case Study..................................................................................................................... 24 7.6 Suggested Contents of the Case Study Report....................................................................................... 25 8. Economic Instruments ................................................................................................................ 26 9. A Note on Environmental Finance.............................................................................................. 27 9.1 Need For a Financial Strategy Linked to Economic Instruments ............................................................. 27 Annex.................................................................................................................................................... 28 A1 Economics of Preserving Open Coastal Area .......................................................................................... 28 A2 Comparing and Evaluating Presently Open Coastal Area “Futures” ........................................................ 29 A3 Environmental Economics Approach to Coastal Erosion ......................................................................... 30 Selected Bibliography......................................................................................................................... 31 Part III: Environmental Economics Pilot Application Case Study: Southern Larnaca Coastal Area ................................................................................................... 33 Abstract ................................................................................................................................................ 35 10 Brief Description of the Area – The Environmental Profile ..................................................... 36 10.1 Resources of the Pilot Area................................................................................................................... 36 11. Choice of the Pilot Application Case Study Area ..................................................................... 37 11.1 The choice of the Pilot Case Study Application Area............................................................................. 37 12. Spatial Planning Zoning Regulation in the Case Study Area .................................................. 39 12.1 Land Use and Building Development Control Zoning ............................................................................39 12.2 Foreshore Protection ............................................................................................................................. 39 12.3 Pressure on the Coast – Population and Housing Density .................................................................... 40 12.4 An Overall Picture of Coastal Development Pressure in Cyprus ........................................................... 41 i 13. The Economic Profile of the Area............................................................................................... 42 13.1 Executive Summary of the Economic Profile .........................................................................................42 13.2 The Urbanisation Process......................................................................................................................44 13.3 Agriculture & Farming in the Pilot Area..................................................................................................51 13.4 The Tourism Sector ...............................................................................................................................57 13.5 Construction and Real Estate ................................................................................................................61 13.6 Industry (Including Small Workshops)....................................................................................................62 13.7 Wholesale and Retail Trade...................................................................................................................62 13.8 Public Administration, Education and Health .........................................................................................63 13.9 Other Economic Activities......................................................................................................................63 14 Why an Environmental Economics Study – Its Purpose And Basic Principles .................... 64 14.1 Key Issues – Gains, Benefits and Stakeholders ....................................................................................64 15. The Value of Environmental Resources in the Case Study Area ............................................ 66 15.1 Valuation Methodology and Approach ...................................................................................................66 15.2 Some Caveats .......................................................................................................................................71 15.3 More General Observations...................................................................................................................72